Illinois lawmakers from both parties have been bragging about passing a balanced budget this year, but Comptroller Susana Mendoza says the state still needs to address more than $7 billion in unpaid bills.
During the two-year budget impasse, Illinois built its backlog to more than double that amount, but since then has been steadily paying off what it owes to businesses, hospitals, and others. Most of that was borrowed using bonds — which carry a lower interest rate than the late payment penalties the state was racking up. Mendoza says state lawmakers approved borrowing at least another billion dollars.
“We’re not going to wipe out the bill backlog with that," she says, "but we will responsibly bring it down and it’s a great step. It’s a great step in the right direction.”
That would get Illinois to within about a billion dollars of where it was before state government ground to a halt during the impasse. A large chunk of those bills are reimbursements owed to healthcare providers that have treated Illinoisans using state-funded health insurance known as Medicaid. Each bill carries a late penalty of 12 percent per year.
Meanwhile, Mendoza says the state budget signed this month by Governor J.B. Pritzker will help put Illinois on more solid fiscal ground. The nearly $40 billion spending plan includes more money for schools and universities. It also accounts for the cost of getting soon-to-be-legalized marijuana and sports betting markets up and running.
At the same time, Pritzker had called for skipping a big part of the state’s pension payment, but scrapped that idea after a rare tax windfall of $1.5 billion poured into the state's coffers in April.
Despite that, credit rating agency Moody’s has so far rated Illinois’s financial outlook as “stable.” Mendoza says that will help as the state tries to sell more bonds to investors.
“I think they looked favorably upon the budget. We still have some work to do when it comes to pensions, and long term fiscal forecast. But, I think the markets like what they see so far, and we’re definitely not the Illinois of the years past. We’re moving in the right direction.”
Moody’s praised state lawmakers for “prioritizing” education funding, but is less confident new taxes from recreational marijuana will make much difference for the state’s finances.